Friends in High Places

by Alan Joch, February 2011

Oracle’s Cindy Reese, senior vice president for worldwide systems operations, and Kurt Doelling, vice president of supply chain operations, know what it’s like to serve on the IT front lines. For the past year, they’ve helped overhaul and modernize the Sun manufacturing and supply chain operations, knowing all the while that Oracle CEO Larry Ellison and Oracle President Safra Catz set the project in motion and were taking ongoing interest in its success.

In other organizations, such executive oversight might be intimidating. But in this case, the interest taken by two of Oracle’s most senior executives was “liberating,” Doelling says. “There were some issues that we’d known were problems for some time, but we were unable to do anything about them,” he explains.

One significant stumbling block was the large number of suppliers—21 separate facilities in all—that Sun had depended on to supply finished goods for customers. The project is whittling down the number to four locations represented by three outside manufacturers. “In the past, too many people had veto power to prevent closing down their favorite supplier location,” says Doelling. “Larry and Safra cut through that very quickly,” he explains, mandating a limit to three locations and naming one person to make the hard decisions on consolidation.

The top Oracle executives also viewed operations from a fresh perspective. Notably, they were the first to question the need for distribution centers, which offered only limited value in return for the millions of dollars in annual expenses they incurred. But the idea was hard to grasp initially. “When Larry and Safra first asked if we could figure out a way to not have them, our first reaction was, ‘No . . . everybody has distribution centers,’” Doelling recalls.

When the executives didn’t relent, the modernization team began to consider, “if we were going to do it without a distribution center, maybe we would do it something like this,’” Doelling explains. Eventually, the group realized that there were better ways than the old way. “We ended up convincing ourselves to do something we probably wouldn’t have even considered otherwise,” he says.